Correlation Between Verbund AG and Constellation Energy
Can any of the company-specific risk be diversified away by investing in both Verbund AG and Constellation Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Verbund AG and Constellation Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verbund AG ADR and Constellation Energy Corp, you can compare the effects of market volatilities on Verbund AG and Constellation Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Verbund AG with a short position of Constellation Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verbund AG and Constellation Energy.
Diversification Opportunities for Verbund AG and Constellation Energy
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Verbund and Constellation is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Verbund AG ADR and Constellation Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Energy Corp and Verbund AG is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Verbund AG ADR are associated (or correlated) with Constellation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Energy Corp has no effect on the direction of Verbund AG i.e., Verbund AG and Constellation Energy go up and down completely randomly.
Pair Corralation between Verbund AG and Constellation Energy
Assuming the 90 days horizon Verbund AG is expected to generate 8.16 times less return on investment than Constellation Energy. But when comparing it to its historical volatility, Verbund AG ADR is 1.98 times less risky than Constellation Energy. It trades about 0.08 of its potential returns per unit of risk. Constellation Energy Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 22,979 in Constellation Energy Corp on October 25, 2024 and sell it today you would earn a total of 10,268 from holding Constellation Energy Corp or generate 44.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verbund AG ADR vs. Constellation Energy Corp
Performance |
| Timeline |
| Verbund AG ADR |
| Constellation Energy Corp |
Verbund AG and Constellation Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verbund AG and Constellation Energy
The main advantage of trading using opposite Verbund AG and Constellation Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verbund AG position performs unexpectedly, Constellation Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Constellation Energy will offset losses from the drop in Constellation Energy's long position.| Verbund AG vs. Alternus Energy Group | Verbund AG vs. First National Energy | Verbund AG vs. Tokyo Electric Power | Verbund AG vs. Clearway Energy Class |
| Constellation Energy vs. Clearway Energy | Constellation Energy vs. Brookfield Renewable Corp | Constellation Energy vs. Nextera Energy Partners | Constellation Energy vs. Brookfield Renewable Partners |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |